Steel Mills

CMC’s Q1 FY22 Results Top Earlier Record

Written by David Schollaert

Commercial Metals Company (CMC) reported yet another record-breaking earnings result. The Irving, Texas-based steelmaker posted net earnings from continuing operations of $232.9 million on net sales of $2.0 billion in the first quarter of fiscal 2022 ended Nov. 30, 2021, besting the previous record set the prior quarter by more than $80 million.

Commercial Metals Co“Our record first-quarter results again demonstrate the earnings power created by our strategic transformation of CMC,” said Barbara Smith, CMC’s chairman, president and CEO. “The portfolio of assets we have built, together with the exceptional execution by our team members, enabled our company to fully capitalize on a very strong market environment.”

CMC’s North American adjusted EBITDA totaled $268.5 million for the first quarter of FY 2022 – its top results to date and outperforming the prior quarter by 26.7% or $56.5 million. That’s up 72.6% compared to $155.6 million in the same period last year, driven by increased margins for steel products and raw materials.

The company’s outstanding results weren’t the only headline-worthy news, as Smith said she was “equally excited by CMC’s growth projects,” highlighting its plans to build a new “rebar-centric” micro mill. The new facility will be geographically situated primarily to serve regions in the eastern U.S.

The steelmaker also said its new rolling line in Europe has boosted its operational and commercial flexibility, while its second micro mill in Mesa, Ariz., continues to progress with site preparation and construction.

CMC also confirmed an agreement to acquire Tensar Corp., a provider of sub-grade reinforcement solutions. The move will significantly extend the steelmaker’s reach in the domestic and international construction markets, Smith said.

CMC’s finished steel shipments were largely sideways year on year, However, growth in CMC’s construction backlog drove a year-over-year increase in downstream shipment volumes, marking the first such increase in eight quarters.

Although mill volumes were mainly flat, CMC saw favorable market conditions across all key products and an increase of $202 per ton in average selling price compared to the same period a year ago and an increase of $82 per ton versus the prior quarter.

The steelmaker’s European segment surged 452% with adjusted EBITDA totaling $79.8 million for Q1 of fiscal 2022, compared to earnings of $14.5 million for the prior-year quarter. The growth was led by strong scrap margins, robust underlying demand, and the addition of a $15.5 million energy credit.

Shipment volumes were impacted by scheduled maintenance during the quarter. Rebar volumes were down year on year due to a planned outage at its mill in Zawiercie, Poland, while merchant bar and other products were relatively unchanged from the prior year aided by sales of higher margin finished products from Zawiercie’s new third rolling line. Average selling price increased by $408 per ton compared to the prior-year quarter, and $106 per ton sequentially. This ballooned margins over scrap of $236 per ton and $120 per ton from the prior year and prior quarter, respectively.

Smith noted that CMC’s strong operating performance and financial results should continue throughout fiscal 2022, “supported by a growing construction backlog in North America, as well as broad strength across key end markets in both North America and Europe.”

The company expects shipments during the second quarter of fiscal 2022 to follow typical seasonal trends, including fewer shipping days due to major holidays and winter weather factors. Despite those dynamics, Smith said that CMC anticipates strong financial results, with margins consistent with, or slightly above, recent levels.

CMC and its subsidiaries manufacture, recycle and fabricate steel and metal products through a network including seven electric arc furnace (EAF) minimills, two EAF micro mills, a rerolling mill, steel fabrication and processing plants, construction-related product warehouses, and metal recycling facilities in the U.S. and Poland.

By David Schollaert,

David Schollaert

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